Dell to Offer SUSE on Servers

Dell officials announced Wednesday an agreement with Linux distributor Novell to distribute and support SUSE Enterprise Server 9 on its single- and dual-processor line of servers.
The company adds a second Linux distro to its line up, and, in so doing, helps Novell gain a stake in the North American market.

The deal marks an expansion of the popular computer manufacturer's server
market strategy and a departure from its exclusivity with Red Hat as a Linux solution. For Novell, the agreement gives greater access to the North American enterprise markets,
as well as more acceptance by software developers.

"They're coming from behind; Red Hat has by far the preponderant market
share, and if Dell puts its weight behind support of SUSE Linux, it may also
influence ISVs in terms of considering SUSE Linux as a second
or alternative port for their applications," said George Weiss, vice
president and research lead for Gartner Group's server group.

Weiss said that while he doesn't have definitive numbers on SUSE vs. Red Hat
market share in the United States, he estimates Red Hat's roughly 80 percent market
share will be slowly winnowed down in coming years to 60 percent or so with
greater adoption to other commercial Linux distributions. He doesn't count
Red Hat out of the game just yet, pointing out the company has tremendous
allegiance with Linux-based ISVs.

Pete Morowski, Dell vice president of software, said the SUSE arrangement
doesn't mean a strain on its relationship with Red Hat  which also
provides server software for the PowerEdge line  but recognition of
customer demand.

"We're continually driven by what customers are asking for, so if you look
at the Linux market, clearly SUSE has a strong position in that
marketplace," he said. "We've had a very long-standing relationship with
Novell, so we look at this primarily as an extension of our relationship with
Novell. Our relationship with Red Hat continues to be strong as ever and we
will continue to offer Red Hat."

As part of the deal, Dell will be the primary point of contact for all
PowerEdge/SUSE support. Pricing on the annual maintenance subscription plan
is $175 per single-CPU server and $269 on dual-processor machines.

Dell will offer SUSE Enterprise Server 9 as part of its PowerEdge package on
select models  1850, the single-processor rack server at $999; 2800,
its dual-processor tower server priced at $1,599; and 2850, the
dual-processor 2U rack server at $1,499. At press time, SUSE Linux wasn't
listed on the Dell Web pages of the three models.

The agreement doesn't include putting the SUSE operating system
pre-installed on Dell servers. According to officials, customer preference
is for "drop-in-the-box" OS shipments rather than pre-installed machines.
The company will continue to fill out custom factory orders that way unless
enough customers ask otherwise.

Regardless of whether SUSE comes pre-installed on Dell servers or not, the
agreement expansion is good news for Novell, which bought the German-based Linux OS developer in November 2003 for $210
million.

With its headquarters and most of its enterprise customer base in Germany
and the European Union, SUSE officials have been looking for a way to break
into the North American markets to compete with Red Hat, which has strong
enterprise support in the United States and Canada. Its acquisition by Novell was
an important first step, but its new relationship with Dell opens doors to a
wide variety of North American  as well as worldwide  businesses.

"Dell does not do anything unless there is demand; they're very cautious of
how they launch products," said Stacey Quandt, a senior business analyst at
the Robert Frances Group, a Westport, CT, based research firm. "[So] it demonstrates that SUSE is a viable
alternative to Red Hat."

Weiss said Dell might have been a little behind its competition
in putting more Linux options on the market, but
it was to be expected, since the company likes to lock down its support and
services channels, as well as see a demand, before making agreements.

Novell officials agree with that assessment, saying broad industry
acceptance of its product line is important for the company's growth, as well
as its continued competition with other operating systems.

"Novell is focused on reducing the barriers to adoption on Linux in the
enterprise," said Ron Hovsepian, president of Novell North America, in a
press conference. "Today's agreement with Dell is a big step in continuing
the drive to reduce those barriers."